South Korea to Regulate Bitcoin Exchanges Soon

Rage Comment : Although South Korea banned ICO not long ago, the local cryptocurrency market continues to develop and has become a major global cryptocurrency market together with Japan's crypto market. In response to this situation, South Korea's financial regulators are accelerating the formulation of regulations to regulate this emerging industry as soon as possible. It is reported that the formulation of relevant regulations has entered the final stage and may be officially launched soon. Judging from the current development situation, this move is also necessary.

Translation: Ina

South Korean authorities are reportedly close to regulating Bitcoin and cryptocurrency exchanges.

South Korea’s financial regulator, the Financial Services Commission (FSC), is in the process of formulating rules that will require cryptocurrency exchanges to operate in compliance with the rules.

The agency publicly revealed its intention to introduce regulations for Bitcoin exchanges last year, focusing on supervision and licensing. FSC Chairman Yim Jong-yong said at the time: "The government will comprehensively promote the systematization of digital currencies to cater to global trends in the United States, Japan and other countries." But six months later, the plan was deadlocked due to a lack of consensus among South Korean authorities, including the Bank of Korea and multiple government departments, on unified supervision.

As the year draws to a close, the FSC is said to be close to finalizing the draft regulations, according to local news outlet Hankyoreh. The proposed new regulations “will treat the operations of cryptocurrency exchanges such as Bithumb, Coinone, and Korbit as unauthorized fundraising activities,” the report states. Putting this into context, cryptocurrency exchanges currently fall under the e-commerce category, which allows them to register as online vendors and operate as e-commerce websites.

However, such regulations will not outlaw cryptocurrency trading. Instead, the new regulatory guidelines will require trading platforms and exchanges to follow certain rules and measures.

The Hankyoreh quoted an FSC official in its report:

“Cryptocurrency exchanges will be required to comply with consumer protection standards, such as segregating deposits for customer assets, and increase transparency, such as setting up procedures to verify customer identities. Authorities will also be empowered to take action against exchanges that violate these rules.”

The regulations will also prevent criminals from abusing cryptocurrencies as a tool for money laundering.

At a forum event hosted by South Korea’s Financial Intelligence Unit on Tuesday, FSC Vice Chairman Kim Yong-beom acknowledged that interest and adoption of cryptocurrencies such as Bitcoin and Ethereum is rapidly increasing in South Korean society.

According to Yonhap News Agency, the official also said:

“We will formulate comprehensive countermeasures to prevent cryptocurrencies such as Bitcoin from becoming new channels for money laundering.”

Given that South Korea has become one of the world's largest cryptocurrency trading markets, South Korean authorities have begun to accelerate the regulation of the local cryptocurrency industry.